Investments and agribusiness crediting: the main conclusions of the meting

Ukrainian Agrarian Confederation has become the initiator and one of the organizers of the round table “Investments and agribusiness crediting: features and perspectives”. In February, 8at Kyiv National Economic University (KNEU) representatives of politic, business, finance and scientific sectors met and discussedproblemsaboutgetting loans for farmers and agrarian enterprises and new instruments (crop receipts) for involving investments.

One of the key speakersof this event was the president of Ukrainian Agrarian ConfederationLeonid Kozachenko. He mentioned that native agrarian sector is one of the budgets creating sectors, but it mustn’tform the main part of Ukrainian GDP.  Agriculture and agri-industrial sector always will be in economic trend. The theme of food is very relevant in the world. And the main task for Ukraine is to keep its positions at the global market. Actually, experts think, that we can triple up the gross production of agrarian goods. For this we need to enlarge yields, productivity and other indicators to the level of leading countries, where agrarian potential is fully realized. Unfortunately, Ukraine can’t implement agrarian potential because of the lack of funds. Our agrarian sector is needed 75 billion dollars. Today we can observe that investments from external sources are reducing.  Leonid Kozachenko thinks that according to this fact our government could use its own funds for supporting agrarian sector. And it will be very important to develop mid-term and long-term lending for agribusiness by Ukrainian banks if we want to achieve the goals.

One of the main speakers was general director of Ukrainian Agrarian Confederation PavloKoval. He talked about government support of agribusiness.

“This year Ukrainian governmentallocated 6.3 billion UAH in the budget for agrarian support– it’s near 1% of Ukrainian GDP. But we don’t know how this money will be distributing among agrarian enterprises and farmers. That’s why it is one of the main problems.

For example, the main part of government support (6.3 billion UAH) for agrarians - 4 billion UAH, will be used for livestock sector, from them 2.5 million UAHwill be used to reduce the cost of loans. But we don’t understand conditions for using this money. We can use them for modernization of equipmentor for building new complexes?

Then we have to understand who is needed this government support.

We often hear about development of small and medium business. Actually, there are many small farms in Europe and their support is 38% from Europe budget. Our country isn’t a member of EU, and we haven’t the same financial opportunities. UAC analyzed 8500 agrarian enterprises with different area. And we calculated that small farms (with area less than 200 ha) on the area of 4.5 million ha produce only 6-7% ofcommodity products.  At the same time big agriholdings (with area more then 10 000 ha) on the area of 5.1 million ha produce 25% of commodity products. Small farmswork at the district level and they need subsidies.

Big agriholdings don’t need subsidies. They are global players that produce goods for export and canattract global financial resources”.

Among speakers were general director of “UkrAgroConsult” Sergey Feofilov; partner of Law Firm SofiyaOleksandrPolivodskyi; head of Council of Association of Ukrainian Banks Stanislav Arzhevitin;business development manager (Ukraine Crop Receipts Project) of International Finance CorporatioOlexandrMuliar;Associate Professor of the Department of Banking (KNEU) Roman Kornyliuk.

IC UAC